Itqan Cap maintains “Neutral” on Budget Saudi, sets TP at SAR 36.5/share

One of the branches of Budget Saudi

Itqan Capital maintained its “Neutral” recommendation on United International Transportation Co. (Budget Saudi) with a 52-week target price (TP) of SAR 36.5.

The brokerage firm expects flat revenues and lower profits in the fiscal year 2021 compared to FY2020, with expectations of full recovery by FY2022.

The performance is attributed to the continued closure of borders until May 2021, hindering short-term rental recovery in H1 2021; normalization of sales volumes from vehicles and profits; and weak business conditions putting continued pressure on long-term lease revenues.

Itqan Capital expects vehicles sales and profits to return to normal in FY2021 from an exceptionally high base in FY2020.

On the other hand, Budget Saudi’s strong balance sheet will continue to help it withstand persistent pressures.